Mcclatchy Co Cl A (NYSE:MNI)

The Company is the newspaper company in the US, also has a robust network of internet assets, including local websites in each of its daily newspaper markets, offering users information, comprehensive news, advertising, e-commerce and other services.

Submitted January 02, 2012

Submitted August 19, 2015

This might go down as either the most brilliant or dumbest management move in 2015. I’m not entirely sure which it will be yet, but you can probably guess which way I am leaning. :)In my view, this move reeks of desperation: “McClatchy approves share… More

Shoulda kept my downthumb on this...ended it in negative points because I got slightly scared. Oh well. But yeah, buying back stock with a good chunk of the little cash you have left is generally a bad, desperate move.

This might go down as either the most brilliant or dumbest management move in 2015. I’m not entirely sure which it will be yet, but you can probably guess which way I am leaning. :)

In my view, this move reeks of desperation:

“McClatchy approves share repurchase program authorizing it to purchase up to $15 mln of common stock through Dec 31, 2016”

Is anyone really buying this? They have $32MM in remaining cash and have burned ($152) MILLION in free cash flow in the first six months of the 2015 fiscal year. Why in the world would management think this is a good idea? They have a MASSIVE negative tangible equity of ~($880MM) and a decent amount of debt. I don’t really see how this company has any value for shareholders AT ALL.

To be honest, if I saw some large insider purchases, I might be fooled by this move. But with no purchases (that I can find) in the past 12 months, I really don’t believe any of this. So what are they going to do when they need financing? Issue more stock at $0.50 a share? They already have quite a bit of debt so I cannot believe they’ll be able to go that route.

I’ll be surprised if they stay afloat for longer than 12-18 months. It seems to me that this one is going to be ripe for class action lawsuits, and honestly, I am surprised the “corporate ambulance-chasers” haven’t already pounced on this carcass.

MNI is at multi-year lows despite notable improvements in balance sheet & leverage. Q3-EOY could see further declines, but overall long-term value looking at next year and beyond (assuming a reasonable amount of competence by management). They have plenty of room to maneuver, and I expect thisstock will be back in the $3+ range in < 2 years.